Bring free markets to health care

Published: Sunday, March 31, 2013 at 4:30 a.m.

Last Modified: Friday, March 29, 2013 at 5:24 p.m.

The General Assembly should approve Republican-sponsored legislation that aims to make medical costs more transparent, increase competition and bring down exorbitant costs for hospital services.

The bill, sponsored by Republican Sens. Bob Rucho of Matthews and Harry Brown of Jacksonville, would require hospitals to publicly post prices on the most common medical procedures. It would also provide financial rewards for hospitals that provide low-cost care, and ban a type of double billing now common in radiology, the Charlotte Observer reported.

The legislation was prompted by “Prognosis: Profits,” a five-part investigative series the Observer and The News & Observer of Raleigh published last year. The series showed how “nonprofit” hospitals in North Carolina cities have become hugely profitable, inflating prices on drugs and procedures sometimes as much as 10 times their actual costs.

The newspapers’ investigation showed Charlotte-area hospitals have generated some of the nation’s largest profit margins and amassed billions of dollars in reserves while suing thousands of needy patients, frequently putting liens on their homes and damaging their credit. A follow-up investigation showed that large nonprofit hospitals are dramatically inflating prices on chemotherapy drugs while cornering more of the market on cancer care.

The series ran in April 2012. Earlier this month, TIME magazine published a 24,105-word expose on hospital costs by veteran journalist Steve Brill. Titled “Bitter Pill: How Outrageous Prices and Egregious Profits are Destroying Our Health Care,” the report found that hospitals are maximizing revenues and “sticking patients with bills that have little relationship to the care that’s provided.”

America spends $2.8 trillion annually on medical care — more than the next 10 highest spending countries combined. Meanwhile, Obamacare, the federal health care reform law, is expected to boost claims insurance companies pay out by an average of 32 percent on individual health policies, according to a report released last week by the Society of Actuaries.

The Obama administration says tax credits and subsidies will make health insurance more affordable for middle-class Americans and cover 32 million Americans who now lack insurance. Yet critics as well as many supporters of Obamacare agree the law does not do nearly enough to control spiraling costs.

The first step to do that? Consumers must demand price transparency, Dr. Giovanni Colella said in a March 20 op-ed in Forbes magazine. She describes the situation as “complete market failure in one-sixth of the nation’s economy that has a direct impact on the bottom line of corporate America, wages of workers, and, by extension, on the economic prospects of the country.”

That’s why, in North Carolina, the legislation now before the General Assembly is so important. Patients cannot now comparison shop or effectively question prices because hospitals in the state don’t post prices. The legislation would require hospitals to report prices for their 50 most common procedures. Hospitals would also have to report how much uninsured patients, Medicare, Medicaid and the five largest insurers pay for each procedure.

“You should know what the cost of a procedure is,” Rucho, a retired dentist who co-chairs the Senate Finance Committee, stated in the Observer article. “You do that with every other purchase. Why shouldn’t you be able to do that in health care?”

Among other provisions, the legislation would:

u Require every hospital to post its policy on charity care along with the amount it spent on charity care in the previous year.

u Prohibit hospitals from charging multiple times for outpatient radiology services that are rendered only once.

u Reward hospitals with low Medicaid costs by returning to them more of the money the state assesses to them each year to match federal Medicaid funding.

u Ban hospitals owned by the state — including UNC Hospitals — from seizing tax refunds of patients who don’t pay their bills. Only state-owned hospitals now have this power.

The legislation, like the federal health care reform law, won’t fix all that is broken with our health care system. But it is an important start to introduce free market reforms that will give consumers the power to make more informed choices and hopefully drive down costs.

<p>The General Assembly should approve Republican-sponsored legislation that aims to make medical costs more transparent, increase competition and bring down exorbitant costs for hospital services.</p><p>The bill, sponsored by Republican Sens. Bob Rucho of Matthews and Harry Brown of Jacksonville, would require hospitals to publicly post prices on the most common medical procedures. It would also provide financial rewards for hospitals that provide low-cost care, and ban a type of double billing now common in radiology, the Charlotte Observer reported.</p><p>The legislation was prompted by Prognosis: Profits, a five-part investigative series the Observer and The News & Observer of Raleigh published last year. The series showed how nonprofit hospitals in North Carolina cities have become hugely profitable, inflating prices on drugs and procedures sometimes as much as 10 times their actual costs.</p><p>The newspapers’ investigation showed Charlotte-area hospitals have generated some of the nation’s largest profit margins and amassed billions of dollars in reserves while suing thousands of needy patients, frequently putting liens on their homes and damaging their credit. A follow-up investigation showed that large nonprofit hospitals are dramatically inflating prices on chemotherapy drugs while cornering more of the market on cancer care.</p><p>The series ran in April 2012. Earlier this month, TIME magazine published a 24,105-word expose on hospital costs by veteran journalist Steve Brill. Titled Bitter Pill: How Outrageous Prices and Egregious Profits are Destroying Our Health Care, the report found that hospitals are maximizing revenues and sticking patients with bills that have little relationship to the care that’s provided.</p><p>America spends $2.8 trillion annually on medical care  more than the next 10 highest spending countries combined. Meanwhile, Obamacare, the federal health care reform law, is expected to boost claims insurance companies pay out by an average of 32 percent on individual health policies, according to a report released last week by the Society of Actuaries.</p><p>The Obama administration says tax credits and subsidies will make health insurance more affordable for middle-class Americans and cover 32 million Americans who now lack insurance. Yet critics as well as many supporters of Obamacare agree the law does not do nearly enough to control spiraling costs.</p><p>The first step to do that? Consumers must demand price transparency, Dr. Giovanni Colella said in a March 20 op-ed in Forbes magazine. She describes the situation as complete market failure in one-sixth of the nation’s economy that has a direct impact on the bottom line of corporate America, wages of workers, and, by extension, on the economic prospects of the country.</p><p>That’s why, in North Carolina, the legislation now before the General Assembly is so important. Patients cannot now comparison shop or effectively question prices because hospitals in the state don’t post prices. The legislation would require hospitals to report prices for their 50 most common procedures. Hospitals would also have to report how much uninsured patients, Medicare, Medicaid and the five largest insurers pay for each procedure.</p><p>You should know what the cost of a procedure is, Rucho, a retired dentist who co-chairs the Senate Finance Committee, stated in the Observer article. You do that with every other purchase. Why shouldn’t you be able to do that in health care?</p><p>Among other provisions, the legislation would:</p><p>u Require every hospital to post its policy on charity care along with the amount it spent on charity care in the previous year.</p><p>u Prohibit hospitals from charging multiple times for outpatient radiology services that are rendered only once.</p><p>u Reward hospitals with low Medicaid costs by returning to them more of the money the state assesses to them each year to match federal Medicaid funding.</p><p>u Ban hospitals owned by the state  including UNC Hospitals  from seizing tax refunds of patients who don’t pay their bills. Only state-owned hospitals now have this power.</p><p>The legislation, like the federal health care reform law, won’t fix all that is broken with our health care system. But it is an important start to introduce free market reforms that will give consumers the power to make more informed choices and hopefully drive down costs.</p>